The U.S. exchange traded fund universe has more than 1,400 products available and the number is still growing, with proposed SEC filings ranging from run-of-the-mill beta indexing funds to specialized, niche offerings.
Eric Balchunas for Bloomberg points out that there are 982 ETFs waiting for the Securities and Exchange Commission to approve. While the majority of these proposed strategies are plain-vanilla, “me-to” products that try to mimic a large benchmark index, a number of ETF filings offer interesting market exposure.
For instance, the recent Winklevoss Bitcoin ETF filing has already stirred the markets, inciting some over-the-top negative reactions from many financial observers. The ETF would provide an easier venue for investors to gain exposure to the Bitcoin alternative asset. [Winklevoss Bitcoin ETF: Crazy, or Crazy Like a Fox?]
The IndexIQ Physical Diamond Trust would be the first physically backed diamond ETF. The fund would act like precious metal ETFs where shares are backed by physical assets stored in a vault. However, market observers argue that someone will have to find a viable way to sort and value diamonds in a uniform way so that investors would be able to effectively price the holdings. [GemShares Files for Physically Backed Diamond ETF]
A city-specific LocalShares Nashville ETF is in the works. The fund will track publicly traded companies that have corporate headquarters in Nashville, including Dollar General and Cracker Barrel. In 2009, two city-specific funds, Texas Large Companies ETF (TXF) and Oklahoma ETF (OOK), both closed due to poor investment demand.
In March, iShares filed for the socially responsible Human Rights Index Fund that excludes companies associated with countries that are known human rights violators, including those with “widespread death, torture, rape, forced labor and forced displacement from communities.” [iShares Files ‘Human Rights’ ETF]
ProShares also filed for eight Credit-Default-Swap ETFs. Credit-default swaps are used to hedge against losses on corporate debt or speculate on creditworthiness – the contract generates a profit if the bond issuer fails to meet its obligations, minus what the default debt is worth. [Because You Need a CDS ETF]
In an attempt to capitalize on China’s “five-year plans,” the KraneShares CSI China Five Year Plan ETF will seek out companies that benefit from Chinese government’s support during each of their five-year plans. For instance, the recent leg includes a focus on solar energy. [Solar ETFs Shine As China Expands Capacity]
Kazakhstan – maybe you know the country from that comedic satire Borat – is rich in oil reserves, ranking tenth in the world. The Global X Kazakhstan ETF would follow the MSCI Kazakhstan Index, which has gained 136% since November 2005.
In a rising interest rate environment, the AdvisorShares TreesDale Rising Rate ETF hopes to benefit from higher yields by investing in “agency interest-only mortgage-backed securities, interest-only swaps and certain other mortgage-related derivative instruments, while maintaining a negative portfolio duration with a generally positive current yield by investing in U.S. Treasury obligations and other liquid rate instruments.” [AdvisorShares Has a ‘Rising Rate’ ETF in the Works]
A growing population and dwindling supply of consumable water could make the Direxion Water Bull 3x Shares a profitable idea. The fund will track a 300% exposure to pump and filter manufacturers, water utilities and irrigation equipment companies.
Additionally, with more people looking what hedge funds and institutional investors are doing, a Global X Top Activist Investor Holdings would offer a way to track top U.S. listed equity positions held by some of the world’s top activist investors. [ETF Spotlight: ‘Guru’ Hedge Fund Clone]
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.